Oil and natural gas are the two most important natural resources of Iran that have been developed. Most other mineral resources such as chromium, copper, gypsum, lead, zinc, manganese, antimony, and uranium remain largely undeveloped. Major coal mines are in Khorasan, Kerman, Mazandaran and Gilan; smaller ones operate near Tehran, in Azerbaijan, and in Isfahan. Cement is produced in the provinces of Tehran and Khuzestan.
Production of oil and natural gas is concentrated in the southwest, but oil has also been found near Qom and Dashte-Kavir, and in the off-shore areas of the Persian Gulf. Iran was the earliest among the nations of Southwest Asia to produce oil on a large scale. Commercial production was started in 1912 originally by the Anglo-Persian Oil Company at Abadan, but was heavily damaged during the Iran- Iraq War in 1990.
Pipelines to inland oil refineries also exist at Isfahan, Shiraz, Lavan, Tehran, and Tabriz, where a variety of refined products are manufactured. Oil is produced both for export and for domestic needs. Abadan is accessible to small tankers and long distance hauling for export is made from the terminal of Kharg Island in the Persian Gulf where oil is piped from Abadan.
From the Kharg Island terminal oil is shipped by tankers to Western Europe, Japan, and other countries. Iran possesses nearly 8 percent of the world’s petroleum reserves, and those of natural gas are even higher. In normal times, Iran is the world’s fourth largest oil producer (after Russia, the U.S., and Saudi Arabia). Oil forms the nation’s most valuable export; along with petroleum products and natural gas it accounts for over 80 percent of the country’s total exports.
Natural gas is found in the Elburz Mountains and piped to all major cities. The petrochemical industry is concentrated in the south at Bandar-e-Khomeini and at Kharg Island producing ammonia, phosphates, sulfur, sulfuric acid, and other products. Many of the manufacturing plants producing petrochemical products were established as joint ventures with Japanese, American, German, and other European companies.
Although close to one-fifth of Iran’s labor force is engaged in agricultural activities (still making it the primary sector of the economy) agriculture accounts for a relatively small part of the nation’s gross domestic product. Due to the shortage of water and the poverty of the soil in many areas, less than 11 percent of the agricultural land is under cultivation. Only one-third of the cultivated land is irrigated; the rest is devoted to dry farming. Nearly one-half of Iran is unproductive desert or mountain land, 7 percent is forest area, and 6 percent is classed as grazing land.
The basic problem of livelihood in rural Iran is the shortage of cropland. The farms are small; most are less than 25 acres (about 10 hectares). Farming areas are mostly concentrated on the several patches of oases surrounded by tracts of unexploited deserts or mountain slopes, or in the narrow, coastal plains of the Caspian and the fertile Khuzistan region at the head of the Persian Gulf.
A unique method of providing water to the farm, which probably was developed first in Iran over 2,000 years ago, is the qanat system. The qanats are essentially horizontal tunnels with a slight gradient that carry water over long distances. To give access to the tunnel, a number of vertical shafts are dug at closely spaced intervals and thus water is tapped for irrigation.
A long qanat may have several wells. The use of the qanat is widespread especially on or near the areas of gentle slopes leading from the rainfed mountains, and is possibly one of the most efficient dry systems of irrigation as the underground channels keep both evaporation and seepage to a minimum.
A wide range of temperature conditions in the various parts of the country makes it possible to cultivate a variety of crops. These include cereals (wheat, barley, rice, and corn), fruits (dates, figs, pomegranates, melons and grapes), vegetables, cotton, sugarcane, sugar beets, nuts, olives, spices, tea and tobacco.
Agriculture is largely of subsistence type, and wheat is the major crop; the regions of its greatest production are the Mashhad region, the valleys in the northwest Zagros, districts of Lake Urmia, Karman, Isfahan, and the well-water tracts of Khuzistan. Barley is grown in the same areas as those for wheat.
Rice is grown in the Caspian region and Gilan where water is adequate and irrigation facilities exist. Fruit growing is of considerable importance, since fruit forms an important part of the everyday diet of most people. Iran is known for its apricots, and many varieties of grapes (Shiraz is reputed to produce some excellent varieties) are grown.
Other fruit crops are: figs, peaches, melons, oranges, and citrus fruits confined to the Caspian coast and the foothills of the central Zagros Mountains. In southern Iran dates gain importance, particularly on the coastal plains of the Persian Gulf and the Gulf of Oman.
Cotton is the chief cash crop grown largely in the Azerbaijan area, in Kerman, Fars, and Khuzistan province. Sugar beets, tea, tobacco, and opium are some other crops. Silk, a traditional product of Iran, is important on the eastern section of the Caspian coast, where mulberry growing is locally widespread.
Most of the agricultural products of Iran are consumed locally and food grains have to be imported (in 1990 grains and derivatives accounted for 7 percent of the country’s imports). Fishing is an important activity in the Caspian Sea area where several varieties of fish such as sturgeon (yielding Iran’s best known roe caviar), salmon, carp, perch, and mullet, are caught.
Persian Sea fishing also yields several varieties that include shrimp and prawns. Of the country’s livestock, sheep are by far the most numerous, followed by goats, cattle, horses, water buffalo, and camels. During the rule of Reza Shah Pahlevi, the Iranian government had undertaken steps enticing the pastoralists and semi-nomads to take up sedentary cultivation, which created much social upheaval and human suffering.
It also brought substantial economic loss to the pastoralists and the carpet industry which was dependent on local wool. The revolutionary administration since 1979 has tried to initiate several reforms to revive pastoralism.
One-fifth of Iran’s labor force is engaged in manufacturing and construction activities. Most factories employ traditional handicraft or cottage style methods except for oil and petrochemical plants. Modern manufacturing dates to the mid- 1930s when Reza Shah Pahlevi began a program of industrialization to produce manufactured goods for the domestic market.
Earlier Iran did produce a moderate volume of manufactured goods, made entirely by hand or with the use of primitive machinery. During the brief period before World War I, state-owned plants were well located in relation to raw materials and markets, and in general, were fairly successful.
But the bulk of manufacturing activity remained in small-scale, traditional, craft-oriented, bazaar-style industries such as carpet weaving and textile manufacturing that are less susceptible to mechanization. Carpet making, a predominantly cottage industry, has traditionally been very important.
Iran has its own designs and colors of carpets (Tabriz specializes in pastel tints, and vivid colors are employed by other cities, whereas heavier woolen carpets come from Kerman, Tehran, and Shiraz. Finished products find ready markets in the U.S., Germany, France, U.K., Japan and many other nations all over the world. Although the industry is controlled now in part by large companies, it is still carried on by hand in small shops and homes.
Since 1954, industrialization has registered considerable gains and Iran has been producing a wide range of products such as automobiles, electrical appliances, telecommunications equipment, industrial machinery, paper, rubber products, steel, food products, wood and leather goods, textiles, and pharmaceuticals.